Bill Text: CA AB498 | 2013-2014 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Medi-Cal.

Spectrum: Slight Partisan Bill (Republican 4-2)

Status: (Passed) 2013-10-10 - Chaptered by Secretary of State - Chapter 672, Statutes of 2013. [AB498 Detail]

Download: California-2013-AB498-Amended.html

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BILL NUMBER: AB 498	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 20, 2013
	AMENDED IN SENATE  JUNE 20, 2013
	AMENDED IN ASSEMBLY  MAY 7, 2013
	AMENDED IN ASSEMBLY  APRIL 23, 2013
	AMENDED IN ASSEMBLY  MARCH 19, 2013

INTRODUCED BY   Assembly Member Chávez

                        FEBRUARY 20, 2013

   An act to amend Section 14166.151 of  , and to repeal Sections
14166.152, 14166.153, 14166.154, and 14166.155 of,  the Welfare
and Institutions Code, relating to Medi-Cal.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 498, as amended, Chávez. Medi-Cal. 
   Existing 
    (1)     Existing  law provides for the
Medi-Cal program, which is administered by the State Department of
Health Care Services, under which qualified low-income individuals
receive health care services. The Medi-Cal program is, in part,
governed and funded by federal Medicaid Program provisions. Existing
law, subject to federal approval, modifies the inpatient
fee-for-service reimbursement methodology for nondesignated public
hospitals, as defined, under a specified demonstration project for
services on or after July 1, 2012. Existing law provides that
beginning with the 2012-13 fiscal year, and if specified conditions
are met, nondesignated public hospitals, or governmental entities
with which the hospitals are affiliated, shall be eligible to receive
safety net care pool payments for uncompensated care from the Health
Care Support Fund. Existing law provides that these provisions shall
become operative on the date that all necessary federal approvals
have been obtained to implement these and other related provisions.
 Existing law requires designated public hospitals to report and
certify specified   information for each successor
demonstration year beginning with the 2012-13 fiscal year. 
    This bill would revise and recast those provisions. 
This bill would instead authorize the department to seek necessary
federal approvals or waivers to separately implement the safety net
care pool payments for uncompensated care provisions for the 2013-14
and 2014-15 fiscal years. The bill would require the state, if the
state receives federal safety net care pool funds for uncompensated
care under these  provision   provisions  ,
to retain1/2 of the funds for Medi-Cal related expenditures. 
   (2) Under existing law, nondesignated public hospitals may receive
fee-for-service payments for inpatient services, as specified. Under
existing law, beginning with the 2012-13 fiscal year, subject to
federal approval and if specified conditions are met, nondesignated
public hospitals may receive delivery system reform incentive pool
funding, as specified.  
   This bill would eliminate those provisions. 
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 14166.151 of the Welfare and Institutions Code
is amended to read:
   14166.151.  (a) It is the intent of the Legislature to 
reform the inpatient fee-for-service reimbursement methodology for
  allow for a voluntary process for  nondesignated
public hospitals  to claim reimbursement from the safety net care
pool in the successor demonstration project  based on their
public structure  in order to provide new opportunities for
nondesignated public hospitals to receive reimbursement under the
successor demonstration project for care provided to the uninsured
and to receive new incentive payments for achievement related to
delivery system reform.   ,   to the extent
that there is funding available for nondesignated pu   blic
hospitals in that pool, as allowed by the federal government, which
shall be allocated equally between the state and the nondesignated
public hospital, so that for every dollar of certified public
expenditure used by the nondesignated public hospital, the
nondesignated public hospital shall voluntarily allow the state to
use a corresponding certified public expenditure amount for claiming
purposes. 
   (b)  Subject to subdivision (c), beginning  
(1)     Beginning  with services provided on
or after July 1,  2012, fee-for-service payments to
nondesignated public hospitals for inpatient services shall be
governed by this subdivision. Each nondesignated public hospital
shall receive as payment for inpatient hospital services provided to
Medi-Cal beneficiaries during any successor demonstration year, the
federal financial participation claimed by the department based on
the hospital's allowable costs incurred in providing those services,
subject to all of the following:  
   (1) Nondesignated public hospitals shall comply with the
requirements of Section 14166.152. The payments authorized in this
section shall be subject to audit and a final reconciliation where an
overpayment to the nondesignated public hospital shall result in a
collection of the overpayment and an underpayment to the
nondesignated public hospital shall result in a corrective payment.

    (2)    (A) 
   Nondesignated   2013,
nondesignated  public hospitals shall be eligible to receive
safety net care pool payments for uncompensated care costs to the
extent that additional federal funding is made available pursuant to
the Special Terms and Conditions for the safety net care pool
uncompensated care limit of the successor demonstration project and
if they comply with the requirements set forth in  Section
14166.154.   this section.  
   (B) 
    (2)  The amount of funds that may be claimed pursuant to
 subparagraph (A)   paragraph (1)  shall
not exceed the additional federal funding made available under the
safety net care pool for nondesignated public hospital uncompensated
care costs, and shall not reduce the amounts of federal funding for
safety net care pool uncompensated care costs that would otherwise be
made available to designated public hospitals in the absence of this
paragraph, including the amounts available under the Special Terms
and Conditions in effect as of April 1,  2012  
2013  , and amounts available pursuant to Section 15916.

   (C) (i) 
    (3)     (A)   Notwithstanding
 subparagraph (B)   paragraph (2)  , if
the designated public hospitals do not have sufficient certified
public expenditures to claim the full amount of federal funding made
available to the designated public hospitals as referenced in
 subparagraph (B)   paragraph (2)  ,
including consideration of the potential for the designated public
hospitals to have sufficient certified public expenditures in a
subsequent year, the department may authorize the funding to be
claimed by the nondesignated public hospitals. 
   (ii) 
   (B)  The department may determine whether designated
public hospitals do not have sufficient certified public expenditures
to claim the full amount of federal funding pursuant to 
clause (i)   subparagraph (B)  no sooner than after
the submission of the cost reporting information required pursuant
to Section 14166.8 for the applicable successor demonstration year.

   (iii) 
    (C)  If the department makes the determination
identified in  clause (ii)   subparagraph (B)
 based on as-filed cost reporting information submitted prior to
a final audit, the department shall make the determination in
consultation with the designated public hospitals and shall apply an
audit cushion of at least 5 percent to the as-filed cost information.
If the department makes the determination identified in 
clause (ii)   subparagraph (B)  based on audited
cost reporting information, no audit cushion shall be applied.

   (3) (A) Nondesignated public hospitals shall be eligible to
receive delivery system reform incentive pool payments to the extent
additional federal funding is made available for this purpose under
the delivery system reform incentive pool in the successor
demonstration project and if the nondesignated public hospitals
comply with the delivery system reform incentive pool funding
requirements set forth in Section 14166.155.  
   (B) The amount of funds that may be received shall not exceed the
additional federal funding made available for delivery system reform
incentive pool payments to nondesignated public hospitals, and shall
not reduce the amounts that would otherwise be made available to
designated public hospitals in the absence of this paragraph,
including the amounts that designated public hospitals would be
eligible to receive under their delivery system reform incentive pool
plans approved as of January 1, 2012.  
   (C) Notwithstanding subparagraph (B), if the designated public
hospitals are unable to claim the full amount of federal funding made
available to the designated public hospitals pursuant to Section
14166.77 and the Special Terms and Conditions, including through
reallocations made pursuant to paragraph (3) of subdivision (a) of
Section 14166.77 as authorized by the Special Terms and Conditions,
and the unused amount of federal funding made available to the
designated public hospitals cannot be used in a later demonstration
year, the department may authorize such unused funding to be made
available to the nondesignated public hospitals.  
   (c) (1) (A) The reimbursement methodology developed pursuant to
subdivision (b) shall be effective beginning July 1, 2012. If all
necessary federal approvals have not been received by July 1, 2012,
then the effective date shall be retroactive to July 1, 2012. Between
July 1, 2012, and when all necessary federal approvals have been
received, any payments made pursuant to any methodology replaced by
subdivision (b) shall be deemed as interim payments subject to
offsetting and recoupment against payments made under subdivision (b)
pursuant to Section 51047 of Title 22 of the California Code of
Regulations.  
   (B) Subject to paragraph (2), beginning January 1, 2014, the
reimbursement methodology developed pursuant to subdivision (b),
which shall be in effect July 1, 2012, through and including December
31, 2013, shall continue for those nondesignated public hospitals
that certify voluntary participation as described in clause (i), if
the director executes a declaration on or before December 31, 2013,
certifying all of the following:  
   (i) The governmental entities that own or operate a nondesignated
public hospital, or hospitals, have provided certifications of
voluntary participation in the reimbursement methodology pursuant to
subdivision (b).  
   (ii) Any necessary federal approvals have been obtained. 

   (iii) Continuation of the reimbursement methodology for those
nondesignated public hospitals certifying voluntary participation
would be cost beneficial to the state. 
   (2) On December 31, 2013, if one or more of the nondesignated
public hospitals subject to the reimbursement methodology described
in subdivision (b) have not provided written certification of
voluntariness described in clause (i) of subparagraph (B) of
paragraph (1), or if the director determines, for any reason, that
the reimbursement methodology described in subdivision (b) cannot be
implemented on or after January 1, 2014, then the director shall
execute a declaration certifying that the reimbursement methodology
described in subdivision (b) cannot continue to be implemented for
all or one or more of the nondesignated public hospitals, in which
case subdivision (e) shall be implemented on January 1, 2014.
 
   (d) Upon implementation of subparagraph (A) of paragraph (1) of
subdivision (c), implementation of the laws and regulations listed in
paragraphs (1) to (4), inclusive, shall be suspended with respect to
fee-for-service payments to all nondesignated public hospitals for
inpatient services through and including December 31, 2013.
Implementation of the laws and regulations listed in paragraphs (1)
to (4), inclusive, shall also be suspended with respect to
fee-for-service payments to nondesignated public hospitals that
certify voluntary participation if a declaration is executed pursuant
to subparagraph (B) of paragraph (1) of subdivision (c), beginning
on January 1, 2014, and until the expiration of the successor
demonstration project.  
   (1) The Nondesignated Public Hospital Medi-Cal Rate Stabilization
Act in Article 5.17 (commencing with Section 14165.55). 

   (2) The inpatient fee-for-service per diem rate authorized in
Article 2.6 (commencing with Section 14081).  
   (3) The reimbursement methodology for fee-for-service inpatient
services in Sections 14105 and 14105.15, and Article 7.5 (commencing
with Section 51536) of Title 22 of the California Code of
Regulations.  
   (4) Section 14166.17.  
   (e) Subject to the conditions in paragraph (2) of subdivision (c),
on January 1, 2014, the percentage of each intergovernmental
transfer amount retained pursuant to subdivision (j) of Section
14165.57 shall be increased to 20 percent to reimburse the
department, or transferred to the General Fund, for the
administrative costs of operating the Nondesignated Public Hospital
Intergovernmental Transfer Program and for the benefit of the
Medi-Cal program.  
   (f) (1) This section and Sections 14166.152, 14166.153, 14166.154,
and 14166.155 shall become operative on the date all necessary
federal approvals have been obtained to implement all of these
sections.  
   (2) Notwithstanding paragraph (1) of this subdivision and Section
14166.154, if the necessary federal approvals are not obtained to
implement all of the sections set forth in paragraph (1), the
department may seek any necessary federal approvals or waivers to
separately implement the safety net care pool payments for
uncompensated care, as described in paragraph (2) of subdivision (b)
of this section and Section 14166.154, for the 2013-14 and 2014-15
fiscal years. If federal safety net care pool funds for uncompensated
care are received by the state for this purpose, the state shall
retain one-half of the funds for Medi-Cal related expenditures.
 
   (c) Beginning in the 2013-14 fiscal year, within five months after
the end of a successor demonstration year, nondesignated public
hospitals shall submit to the department all of the following
reports:  
   (1) The hospital's Medicare or Medicaid cost report for the
successor demonstration year.  
   (2) Other cost reporting and statistical data necessary for the
determination of amounts due to the hospital under the successor
demonstration project, as requested by the department.  
   (d) For each successor demonstration year, the reports shall
identify all of the costs incurred in providing hospital services to
uninsured individuals.  
   (e) A nondesignated public hospital, or the governmental entity
with which it is affiliated, that operates nonhospital clinics or
provides physician, nonphysician practitioner, or other health care
services that are not identified as hospital services under the
Special Terms and Conditions for the successor demonstration project,
shall report and certify all of the uncompensated uninsured costs of
the services furnished.  
   (f) Reports submitted under this section shall include all
allowable costs.  
   (g) The appropriate public official shall certify to all of the
following:  
   (1) The accuracy of the reports required under this section. 

   (2) That the expenditures to meet the reported costs comply with
Section 433.51 of Title 42 of the Code of Federal Regulations. 

   (3) That the sources of funds used to make the expenditures
certified under this section do not include impermissible provider
taxes or donations, as defined under Section 1396b(w) of Title 42 of
the United States Code, or other federal funds. For this purpose,
federal funds do not include delivery system reform incentive pool
payments or patient care revenue received as payment for services
rendered under programs such as nondesignated state health programs,
the Low Income Health Program, Medicare, or Medicaid.  
   (h) The certification of public expenditures made pursuant to this
section shall be based on a schedule established by the department
in accordance with federal requirements.  
   (1) The director may require nondesignated public hospitals to
submit quarterly estimates of anticipated expenditures, if these
estimates are necessary to obtain interim payments of federal
Medicaid funds.  
   (2) All reported expenditures shall be subject to reconciliation
to allowable costs, as determined in accordance with applicable
implementing documents for the successor demonstration project. 

   (i) The timeframes for data submission and reporting periods may
be adjusted as necessary in accordance with federal requirements.
 
   (j) (1) Beginning in the 2013-14 fiscal year, safety net care pool
payments for uncompensated care shall be allocated to nondesignated
public hospitals as follows:  
   (A) The department shall determine the maximum amount of safety
net care pool payments for uncompensated care that is available to
nondesignated public hospitals for the successor demonstration year
pursuant to this section. This determination shall be made solely
with respect to allowable uncompensated care costs incurred by
nondesignated public hospitals and reported pursuant to subdivisions
(c) to (i), inclusive.  
   (B) The department shall establish, in consultation with the
nondesignated public hospitals, an allocation methodology to
determine the amount of safety net care pool payments to be made to
the nondesignated public hospitals. The allocation methodology shall
be implemented when the director issues a declaration stating that
the methodology complies with all applicable federal requirements for
federal financial participation.  
   (2) A safety net care pool payment amount may be paid to a
nondesignated public hospital, or governmental entity with which it
is affiliated, pursuant to this section independent of the amount of
uncompensated uninsured costs that is certified as public
expenditures pursuant to subdivisions (c) to (i), inclusive, provided
that, in accordance with the Special Terms and Conditions for the
successor demonstration project, the recipient hospital shall not
return any portion of the funds received to any unit of government,
excluding amounts recovered by the state or federal government. 

   (3) Nondesignated public hospitals, or governmental entities with
which they are affiliated, shall receive the amount established
pursuant to this subdivision, less the 50 percent retained by the
state pursuant to subdivision (l), in quarterly interim payments
during the successor demonstration year. The determination of the
interim payments shall be made on an interim basis prior to the start
of each successor demonstration year. The department shall use the
cost and statistical data that is in subdivisions (c) to (i),
inclusive.  
   (k) (1) No later than April 1 following the end of the relevant
reporting period for the successor demonstration year, the department
shall undertake an interim reconciliation of the payment amount
established pursuant to subdivision (j) for nondesignated public
hospitals using Medicare and other cost, payment, and statistical
data submitted by the hospitals for the successor demonstration year,
and shall adjust payments to the hospitals accordingly.  
   (2) All payments to nondesignated public hospitals are subject to
a final reconciliation that is subject to final audits of all
applicable Medicare and other cost, payment, discharge, and
statistical data for the successor demonstration year.  
   (l) The process for supplemental payments made in subdivisions (j)
and (k) is a voluntary process the implementation of which is
limited by this subdivision. The department may submit for federal
approval a proposed amendment to the successor demonstration project
to implement this section.  
   (1) If a nondesignated public hospital voluntarily agrees to
participate in a process that, up to the amount of safety net care
pool funds available, allows the certified public expenditures for
uncompensated care under this section to be allocated equally between
the state and the nondesignated public hospital, so that for every
dollar of certified public expenditure used by the nondesignated
public hospital, the nondesignated public hospital shall voluntarily
allow the state to use a corresponding certified public expenditure
amount for claiming purposes. Participation in the safety net care
pool under this section is voluntary on the part of the nondesignated
public hospital for the purposes of all applicable federal laws. If
a nondesignated public hospital does not voluntarily agree to
participate in this process, it shall not be eligible to receive
safety net care pool funds.  
   (2) If the budget neutrality requirements established under
Section XI of the Special Terms and Conditions of the successor
demonstration project are exceeded, payments made under this section
shall be reduced to achieve budget neutrality. The state's share of
the federal financial participation shall be reduced after the
provider's share has been exhausted.  
   (3) Notwithstanding any other provision of law, upon the receipt
of a notice of disallowance or deferral from the federal government
related to any certified public expenditures for uncompensated care
incurred by the nondesignated public hospital that are used for
federal claiming under the safety net care pool pursuant to the
successor demonstration project after this section is implemented,
and subject to the processes set forth in this section, the
department and the nondesignated public hospitals shall each be
responsible for one-half of the repayment of the federal portion of
any federal disallowance or deferral for the applicable successor
demonstration year, up to the amount claimed and allocated pursuant
to this section for that particular year beginning with the 2013-14
fiscal year.  
   (4) This section shall be implemented only to the extent other
federal financial participation is not jeopardized.  
   (m) Eligible providers, as a condition of receiving supplemental
reimbursement pursuant to this section, shall enter into, and
maintain, an agreement with the department for the purposes of
implementing this section and reimbursing the department for the
costs of administering this section, including, but not limited to,
the state personnel costs. No General Fund moneys shall be expended
for the implementation and administration of this section. 
   SEC. 2.    Section 14166.152 of the  
Welfare and Institutions Code   is repealed.  
   14166.152.  (a) Pursuant to subdivision (b) of Section 14166.151,
and notwithstanding any other law, fee-for-service payments to
nondesignated public hospitals for inpatient services to Medi-Cal
beneficiaries shall be governed by this section. The hospitals'
allowable costs shall be determined, certified, and claimed in
accordance with Section 14166.153. The Medicaid federal financial
participation received by the state for the certified public
expenditures of the hospital, or the governmental entity with which
the hospital is affiliated, for inpatient hospital services rendered
to Medi-Cal beneficiaries shall be paid to the hospital.
   (b) With respect to each successor demonstration year, each of the
nondesignated public hospitals shall receive an interim payment for
each day of inpatient hospital services rendered to Medi-Cal
beneficiaries based upon claims filed by the hospital in accordance
with the claiming process set forth in Division 3 (commencing with
Section 50000) of Title 22 of the California Code of Regulations. The
interim per diem payment amount shall be based on estimated costs,
which shall be derived from statistical data from the following
sources and which shall be multiplied by the federal medical
assistance percentage:
   (1) For allowable costs reflected in the Medicare cost report, the
cost report most recently audited by the hospital's Medicare fiscal
intermediary adjusted by a trend factor to reflect increased costs,
as approved by the federal Centers for Medicare and Medicaid Services
for the successor demonstration project.
   (2) For allowable costs not reflected in the Medicare cost report,
each hospital shall provide hospital-specific cost data requested by
the department. The department shall adjust the data by a trend
factor as necessary to reflect project year allowable costs.
   (c) Until the department commences making payments pursuant to
subdivision (b), the department may continue to make fee-for-service
per diem payments to the nondesignated public hospitals pursuant to
the selective provider contracting program in accordance with Article
2.6 (commencing with Section 14081), for services rendered on and
after July 1, 2012. Per diem payments shall be adjusted retroactively
to the amounts determined under the payment methodology prescribed
in this section.
   (d) No later than April 1 following the end of the relevant
reporting period for the successor demonstration year, the department
shall undertake an interim reconciliation of payments made pursuant
to subdivisions (a) to (c), inclusive, based on Medicare and other
cost and statistical data submitted by the hospital for the year and
shall adjust payments to the hospital accordingly.
   (e) (1) The nondesignated public hospitals shall receive
supplemental reimbursement for the costs incurred for physician and
nonphysician practitioner services provided to Medi-Cal beneficiaries
who are patients of the hospital, to the extent that those services
are not claimed as inpatient hospital services by the hospital and
the costs of those services are not otherwise recognized under
subdivision (a).
   (2) Expenditures made by the nondesignated public hospital, or a
governmental entity with which it is affiliated, for the services
identified in paragraph (1) shall be reduced by any payments received
pursuant to Article 7 (commencing with Section 51501) of Title 22 of
the California Code of Regulations. The remainder shall be certified
by the appropriate public official and claimed by the department in
accordance with Section 14166.153. These expenditures may include any
of the following:
   (A) Compensation to physicians or nonphysician practitioners
pursuant to contracts with the nondesignated public hospital.
   (B) Salaries and related costs for employed physicians and
nonphysician practitioners.
   (C) The costs of interns, residents, and related teaching
physician and supervision costs.
   (D) Administrative costs associated with the services described in
subparagraphs (A) to (C), inclusive, including billing costs.
      (3) Nondesignated public hospitals shall receive federal
financial participation based on the expenditures identified and
certified in paragraph (2).
   (4) The federal financial participation received by the department
for the certified public expenditures identified in paragraph (2)
shall be paid to the nondesignated public hospital, or a governmental
entity with which it is affiliated.
   (5) Supplemental reimbursement under this subdivision may be
distributed as part of the interim payments under subdivision (b), on
a per-visit basis, on a per-procedure basis, or on any other
federally permissible basis.
   (6) The department shall submit for federal approval, by September
30, 2012, a proposed amendment to the Medi-Cal state plan to
implement this subdivision, retroactive to July 1, 2012, to the
extent permitted by the federal Centers for Medicare and Medicaid
Services. If necessary to obtain federal approval, the department may
limit the application of this subdivision to costs determined
allowable by the federal Centers for Medicare and Medicaid Services.
If federal approval is not obtained, this subdivision shall not be
implemented.
   (f) This section shall become operative as provided in subdivision
(f) of Section 14166.151. 
   SEC. 3.    Section 14166.153 of the  
Welfare and Institutions Code   is repealed.  
   14166.153.  (a) Beginning in the 2012-13 fiscal year, within five
months after the end of a successor demonstration year, each of the
nondesignated public hospitals shall submit to the department all of
the following reports:
   (1) The hospital's Medicare cost report for the project year or
successor demonstration year.
   (2) Other cost reporting and statistical data necessary for the
determination of amounts due the hospital under the demonstration
project or successor demonstration project, as requested by the
department.
   (b) For each project year or successor demonstration year, the
reports shall identify all of the following:
   (1) To the extent applicable, the costs incurred in providing
inpatient hospital services to Medi-Cal beneficiaries on a
fee-for-service basis and physician and nonphysician practitioner
services costs, as identified in subdivision (e) of Section
14166.152.
   (2) The costs incurred in providing hospital services to uninsured
individuals.
   (c) Each nondesignated public hospital, or governmental entity
with which it is affiliated, that operates nonhospital clinics or
provides physician, nonphysician practitioner, or other health care
services that are not identified as hospital services under the
Special Terms and Conditions for the demonstration project and
successor demonstration project, shall report and certify all of the
uncompensated Medi-Cal and uninsured costs of the services furnished.
The amount of these uncompensated costs to be claimed by the
department shall be determined by the department in consultation with
the governmental entity so as to optimize the level of claimable
federal Medicaid reimbursement.
   (d) Reports submitted under this section shall include all
allowable costs.
   (e) The appropriate public official shall certify to all of the
following:
   (1) The accuracy of the reports required under this section.
   (2) That the expenditures to meet the reported costs comply with
Section 433.51 of Title 42 of the Code of Federal Regulations.
   (3) That the sources of funds used to make the expenditures
certified under this section do not include impermissible provider
taxes or donations as defined under Section 1396b(w) of Title 42 of
the United States Code or other federal funds. For this purpose,
federal funds do not include delivery system reform incentive pool
payments or patient care revenue received as payment for services
rendered under programs such as nondesignated state health programs,
the Low Income Health Program, Medicare, or Medicaid.
   (f) The certification of public expenditures made pursuant to this
section shall be based on a schedule established by the department
in accordance with federal requirements.
   (1) The director may require the nondesignated public hospitals to
submit quarterly estimates of anticipated expenditures, if these
estimates are necessary to obtain interim payments of federal
Medicaid funds.
   (2) All reported expenditures shall be subject to reconciliation
to allowable costs, as determined in accordance with applicable
implementing documents for the demonstration project and successor
demonstration project.
   (g) The director shall seek Medicaid federal financial
participation for all certified public expenditures reported by the
nondesignated public hospitals and recognized under the successor
demonstration project.
   (h) The timeframes for data submission and reporting periods may
be adjusted as necessary in accordance with federal requirements.
   (i) This section shall become operative as provided in subdivision
(f) of Section 14166.151. 
   SEC. 4.    Section 14166.154 of the  
Welfare and Institutions Code   is repealed.  
   14166.154.  (a)  (1) Beginning in the 2012-13 fiscal year, if the
reimbursement methodology in subdivision (b) of Section 14166.151 is
in effect and federal approval is obtained for an amendment to the
successor demonstration project that was submitted pursuant to
subdivision (d), then, with respect to each successor demonstration
year, nondesignated public hospitals, or governmental entities with
which they are affiliated, shall be eligible to receive safety net
care pool payments for uncompensated care from the Health Care
Support Fund established pursuant to Section 14166.21. Safety net
care pool payments for uncompensated care shall be allocated to
nondesignated public hospitals as follows:
   (A) The department shall determine the maximum amount of safety
net care pool payments for uncompensated care that is available to
nondesignated public hospitals for the successor demonstration year
pursuant to paragraph (2) of subdivision (b) of Section 14166.151.
This determination shall be made solely with respect to allowable
uncompensated care costs incurred by nondesignated public hospitals
and reported pursuant to Section 14166.153.
   (B) The department shall establish, in consultation with the
nondesignated public hospitals, an allocation methodology to
determine the amount of safety net care pool payments to be made to
each hospital. The allocation methodology shall be implemented when
the director issues a declaration stating that the methodology
complies with all applicable federal requirements for federal
financial participation.
   (2) A safety net care pool payment amount may be paid to a
nondesignated public hospital, or governmental entity with which it
is affiliated, pursuant to this section independent of the amount of
uncompensated Medi-Cal and uninsured costs that is certified as
public expenditures pursuant to Section 14166.153, provided that, in
accordance with the Special Terms and Conditions for the successor
demonstration project, the recipient hospital does not return any
portion of the funds received to any unit of government, excluding
amounts recovered by the state or federal government.
   (3) In establishing the amount to be paid to each nondesignated
public hospital under this subdivision, the department shall minimize
to the extent possible the redistribution of federal funds that are
based on certified public expenditures as described in paragraph (2).

   (b) Each nondesignated public hospital, or governmental entity
with which it is affiliated, shall receive the amount established
pursuant to subdivision (a) in quarterly interim payments during the
successor demonstration year. The determination of the interim
payments shall be made on an interim basis prior to the start of each
successor demonstration year. The department shall use the same cost
and statistical data that is used in determining the interim
payments for Medi-Cal inpatient hospital services under Section
14166.152.
   (c) (1) No later than April 1 following the end of the relevant
reporting period for the successor demonstration year, the department
shall undertake an interim reconciliation of the payment amount
established pursuant to subdivision (a) for each nondesignated public
hospital using Medicare and other cost, payment, and statistical
data submitted by the hospital for the successor demonstration year,
and shall adjust payments to the hospital accordingly.
   (2) The final payment to a nondesignated public hospital, for
purposes of subdivision (b) and paragraph (1) of this subdivision,
shall be subject to final audits of all applicable Medicare and other
cost, payment, discharge, and statistical data for the successor
demonstration year.
   (d) The department shall submit for federal approval a proposed
amendment to the successor demonstration project to implement this
section.
   (e) This section shall become operative as provided in subdivision
(f) of Section 14166.151. 
   SEC. 5.    Section 14166.155 of the  
Welfare and Institutions Code   is repealed.  
   14166.155.  (a) (1) Beginning in the 2012-13 fiscal year, if the
reimbursement methodology in subdivision (b) of Section 14166.151 is
in effect and federal approval is obtained for an amendment to the
successor demonstration project that was submitted pursuant to
subdivision (c), then nondesignated public hospitals may receive
payments pursuant to this section. The amount of delivery system
reform incentive pool funding, consisting of both the federal and
nonfederal share of payments, that is made available to each
nondesignated public hospital system in the aggregate for the term of
the successor demonstration project shall be based initially on the
delivery system reform proposals that are submitted by the
nondesignated public hospitals to the department for review and
submission to the federal Centers for Medicare and Medicaid Services
for final approval. The initial percentages of delivery system reform
incentive pool funding among the nondesignated public hospitals for
each successor demonstration year shall be determined based on the
annual components as contained in the approved proposals.
   (2) The actual receipt of funds shall be conditioned on the
nondesignated public hospital's progress toward, and achievement of,
the specified milestones and other metrics established in its
approved delivery system reform incentive pool proposal. A
nondesignated public hospital may carry forward available incentive
pool funding associated with milestones and metrics from one year to
a subsequent period as authorized by the Special Terms and Conditions
and the final delivery system reform incentive pool protocol.
   (3) The department may reallocate the incentive pool funding
available under this section pursuant to conditions specified, and as
authorized by, the Special Terms and Conditions and the final
delivery system reform incentive pool protocol.
   (b) Each nondesignated public hospital shall be individually
responsible for progress toward, and achievement of, milestones and
other metrics in its proposal, as well as other applicable
requirements specified in the Special Terms and Conditions and the
final delivery system reform incentive pool protocol, in order to
receive its specified allocation of incentive pool funding under this
section.
   (1) The nondesignated public hospital shall submit semiannual
reports and requests for payment to the department by March 31 and
the September 30 following the end of the second and fourth quarters
of the successor demonstration year, or comply with any other process
as approved by the federal Centers for Medicare and Medicaid
Services.
   (2) Within 14 days after the semiannual report due date, the
nondesignated public hospital system or its affiliated governmental
entity shall make an intergovernmental transfer of funds equal to the
nonfederal share that is necessary to claim the federal funding for
the pool payment related to the achievement or progress metric that
is certified. The intergovernmental transfers shall be deposited into
the Public Hospital Investment, Improvement, and Incentive Fund,
established pursuant to Section 14182.4.
   (3) The department shall claim the federal funding and pay both
the nonfederal and federal shares of the incentive payment to the
nondesignated public hospital system or other affiliated governmental
provider, as applicable. If the intergovernmental transfer is made
within the appropriate 14-day timeframe, the incentive payment shall
be disbursed within seven days with the expedited payment process as
approved by the federal Centers for Medicare and Medicaid Services,
otherwise the payment shall be disbursed within 20 days of when the
transfer is made.
   (4) The nondesignated public hospital system or other affiliated
governmental provider is responsible for any fee or cost required to
implement the expedited payment process in accordance with Section
8422.1 of the State Administrative Manual.
   (c) The department shall submit for federal approval an amendment
to the successor demonstration project to implement this section.
   (d) In the event of a conflict between any provision of this
section and the Special Terms and Conditions for the successor
demonstration project and the final delivery system reform incentive
pool protocol, the Special Terms and Conditions and the final
delivery system reform incentive pool protocol shall control.
   (e) This section shall become operative as provided in subdivision
(f) of Section 14166.151.